Leonsis says NHL is in better shape than NBA

(By Bill Kostroun - AP)

Ted Leonsis told a National Press Club audience on Friday that the NHL is in better financial shape than the NBA, that he plans to build the Wizards based on homegrown young talent rather than imported free agents, and that businesses succeed when they pursue well-rounded goals rather than strictly profits.

Perhaps Leonsis's most surprising assertion was that the often-diminished NHL is actually stronger financially than the NBA, which he said he realized after reviewing the NBA's financials in preparation for his purchase of the Wizards.

The NHL, he said, "has a CBA in place that protects owners from taking stupid pills. There is a hard [salary] cap in the NHL. In the NBA, you can spend a lot of money, and every dollar you're over this luxury tax, you get fined. And there's a lot of basketball teams who are losing a lot of money, and it's the problem with sports. That in the past, it's always been these are playthings, these are sideline businesses, but now the cost of entry in buying a team is very significant.

"I have [enough] cash in, personally, in these endeavors, I could have bought the Tribune Company, just to put it in perspective. These are now serious endeavors. And there's new owners who have come in who have paid a lot of money and are saying we need to have economic systems that are fair. We're partners with the players, but the deals are getting unfinance-able. Banks don't want to lend money with the regularity that they were, because if you have a miss in one of these teams, you could lose a lot of money. And so we're all really looking at how can we make better business models and use prudence and manage it just like it's a real business."

And yet Leonsis returned to many of the themes of his book, which talked about terms mixing financial health with good deeds, terms like "communities of interest" and "double-bottom line businesses." Leonsis said companies that merely pursue financial strength are doing a disservice to their employees and their customers, and that volunteerism and good works and happiness are necessary ingredients.

"I'm disproving this nice guy finish last [maxim]," he said. " I don't believe a lot of what we've learned in business. Nuclear Jack Welch, the greatest business man in history. Lay 'em off! Cut back! You're only here for return on [investment]! Has anybody seen GE stock of late? Is NBC doing well?

"And my core belief is that we're in it together, and if you manage double-bottom-line businesses and your communities of interest are allowed to self-express and you activate volunteerism and you pursue a higher calling, your movies will win awards, your teams will do well and sell out...your book will become a bestseller."

As for the Wizards, Leonsis said he would talk to every team employee and every owner, soliciting ideas and best practices, and that he would then come to his own conclusions. But he again sounded predisposed to use the lessons he had learned in his early days as the Caps owner, when his teams failed with imported free agents. He said other NHL teams are now using the Caps as a best-practices example.

"I believe that young players...you can mold and teach, and they'll know that if they play well, they'll be the ones who are rewarded with your loyalty and money," he said. "Not strangers who have been productive for another team [as] free agents. In this business of happiness, it's anathema to reach out into the industry and bring someone in that no one knows and overpay them and not show your love and respect to your existing community of interest.

"So getting the first pick in the draft I viewed as an harbinger or an omen, that my instinct of what we need to do in the NBA was correct. And I believe we can get a franchise player with that pick and help us to rebuild the Wizards."

Leonsis joked about winning the lottery, describing it as a "game show" victory that he needn't be congratulated for. He also joked that Secaucus is one of his favorite cities in America. And he said the franchise deserved its good luck.

"Maybe I was lucky, and maybe there was good fortune, but maybe there is a higher calling associated with what we're trying to do," he said. "And I firmly believe that no team deserved more good fortune and good luck than the Washington Wizards. Mr. Pollin tragically passed away, we had an incident with one of our players, we had lots of injuries. We deserved it."

The point is both sports need owners that want to be there and play it out. Its not like other business deals where you sell it off at the peak. In the NHL they too often arm twist guys to come and own teams and they either get bored or lose patience. Where the NHL has failed lately is in retaining ownerships - its created instability. The team managers need to know they are allowed to do stuff like sign players and plan things with the owner's long term interests not just his interest for the next few months......To Ted's credit he is a wealthy community minded owner. So many of these guys do not even live where their teams are. Not much heart and soul there.

Something tells me that Leonsis may be getting a call from David Stern very soon.........

Posted by: poguesmahone | May 21, 2010 6:03 PM | Report abuse

Wouldn't it be a call to say "thanks"? Isn't the NBA coming up on labor negotiations in a year or two? I think this is really for the benefit of that - it serves the owners well if they downplay how well they are doing.

As a huge NHL fan and not much of an NBA fan I wish it were true the NHL was doing better (or at least both were doing equal), but I am skeptical due to the lack of a serious money-making TV contract for the NHL.